Apple (AAPL) stock has bounced back impressively after last month’s tariff-driven sell-off sent it tumbling. Sure, the stock took another hit last week post-Q1 results, but it felt more like investors cashing in profits than genuine panic about the business. In fact, I would argue that the tech giant’s numbers were a masterclass in resilience, proving Apple’s ready to navigate the stormy tariff waters engulfing all trade-sensitive stocks. With management radiating confidence and a hefty $100 billion buyback program in place, Apple’s stock looks like a sturdy ship, even at its lofty price.
Apple (AAPL) price history over the past twelve months
Wall Street analyst Brian White recently affirmed his Buy rating, citing several factors, including Apple’s financial performance and “strategic initiatives.” According to Monness analyst, the tech giant’s challenges are eclipsed by its resilient revenue growth, iPhone sales returning to trend, and Mac revenue exceeding expectations. The company’s decision to boost its quarterly cash dividend is the cherry on top for investors still worried about supply chain issues and tariff cost burdens.
Q2 Strengths: A Broad Win for Apple
To begin with, Apple’s fiscal Q2 was broadly superb, with $95.4 billion in revenue, up 5% year-over-year, topping Wall Street’s $94.68 billion forecast. iPhone sales, often knocked as Apple’s weak spot, came in strong at $46.8 billion, above the $45.6 billion expected and slightly up from $45.9 billion a year ago.
Apple Forecast EPS vs Actual EPS
Also, Mac revenue jumped 6.7% to $7.5 billion, fueled by the M4 MacBook Air, while iPad sales hit $6.4 billion, boosted by new M3 models. Services, the profit engine, soared 11.6% to $26.6 billion, just shy of the $26.7 billion forecast but setting a new record.
Every segment except Wearables (down slightly) displayed growth, and the active device base reached an all-time high. Even in Greater China, where revenue fell 2.3% to $16 billion, iPhone demand held up better than expected.
Profitability Keeps Climbing
Moving toward the bottom line, Apple’s Q2 profitability was a sight to behold, with net income rising to $24.8 billion and gross margins hitting a stellar 46.9%, among the company’s best ever. EPS climbed 8% to $1.65, outpacing revenue growth despite tariff costs and forex headwinds.
According to analysts, the secret sauce is a high-margin Services segment, and a product mix favoring pricier Macs and iPads. Apple has also been a wizard at supply chain efficiency, sourcing more chips domestically (19 billion planned for 2025) and optimizing costs.
Even with rising component prices, Apple kept operating expenses tight, letting profits shine. The share buyback program chipped in too, reducing share count and juicing EPS. It’s classic Apple: squeezing more profit from every dollar, even when the world’s throwing curveballs.
Tariff-Proofing the Business
Now, tariffs are surely looming large, with CEO Tim Cook flagging a $900 million hit for the June quarter (Q3), dragging expected gross margins to 45.5%-46.5%, below the 46.58% analysts hoped for. However, Apple is not rattled. Mr. Cook noted on the earnings call that years of supply chain diversification (half of U.S.-bound iPhones now from India, most Macs and iPads from Vietnam) cushion the blow.
A hefty pre-tariff inventory stockpile, built after last year’s trade talks, adds another layer of protection. Cook also highlighted a $500 billion U.S. investment plan, including new Texas server factories and partnerships with chipmakers like TSMC (TSM) for domestic production.
Apple CEO Tim Cook at Apple’s flagship Tower Theatre retail store in downtown Los Angeles.
In the meantime, Apple’s financial overall muscle, with $24 billion in operating cash flow in Q2, allows it to absorb costs without flinching. Cook stayed diplomatic on long-term tariff risks, stressing, “We’re deeply engaged with policymakers to navigate this thoughtfully.” The vibe on Wall Street appears to echo this resilience, with analysts noting Apple’s global footprint and lobbying clout could blunt tariff pain.
However, by leaning on domestic chip sourcing and a flexible supply chain alone, Apple has built a safeguard against trade wars that could sustain its growth.
Premium Price, Premium Value
Of course, at 28.5x this year’s expected EPS, Apple’s stock is no steal for a company growing in the mid-single digits. Even compared to most tech stocks, the valuation can feel steep. However, the $100 billion buyback program should continue to translate to elevated buying volumes for the stock, all while propping up EPS over time.
Apple (AAPL) Stock Buybacks (Quarterly) Chart
I still feel like Apple is a pricey stock, but I have also accepted that it’s going to continue to be a Wall Street darling, with many investors eagerly waiting to buy any dip that might occur.
Is Apple a Buy, Hold, or Sell?
Despite the stock’s pricey valuation, analysts remain relatively bullish on AAPL stock. Over the past three months, Apple has gathered 17 Buy, eight Hold, and four Sell ratings, forming a Moderate Buy consensus on Wall Street. Today, AAPL stock has an average price target of $228.84 per share, implying a 15% upside potential from current price levels.
Apple’s fiscal Q2 results demonstrate that the company is not just weathering tariff headwinds but is thriving despite them. With $95.4 billion in revenue, booming Services, and a supply chain dodging tariff blows, Apple’s in fighting shape.
The stock’s hefty valuation raises eyebrows, although this has always been the case; nobody has ever lost money buying AAPL stock and holding for several years. Regardless, the $100 billion buyback and unmatched ecosystem make it a solid buy, making me confident that Apple will keep shining with Mr. Cook at the helm.
